Thoughts on Washington, WSU, June regents meetings and stadium financing
The Pac-12's media-rights negotiations are holding up long-term financial planning. Plus, an explainer on stadium debt and why it matters.
Washington’s athletic administrators didn’t appear before the school’s board of regents for their annual spring financial update, but the consent agenda for the June meeting does shed at least some light on the department’s current (and future) financial challenges.
At the heart of the issue is the debt service owed on the internal loan that helped fund the renovation of Husky Stadium.
First, some background.
The athletic department leveraged the university’s internal lending program to cover construction costs, with the school selling 30-year bonds to finance the project. That means the athletic department must make annual payments back to the school throughout the life of the loan. In FY22 — the most recently completed fiscal year, running July 1, 2021 through June 30, 2022 — that payment was estimated just shy of $14 million.
As a result of pandemic-related financial challenges, the department asked the regents in May 2022 to temporarily restructure that debt service to interest-only payments beginning in FY23, which concludes at the end of the month. At the time, the department estimated a payment of a little more than $10.7 million this year, allowing for some flexibility as it increased investment in football salaries and budget and continued to pay the buyout of former coach Jimmy Lake.
The department already restructured that debt back in May 2019, asking to pay slightly less in the near-term before upping the payments in concert with the Pac-12’s new media-rights contract — a sound strategy at the time, but now a murky proposition with USC and UCLA leaving the conference.